Prime Minister splurges to close poll gap

By Michelle Grattan, Brisbane

13 November 2007 — 11:00am

THE Howard Government has promised a rebate for the education costs — including private school fees — of all Australian children, in a $9.4 billion bid for re-election as it desperately tries to close the persisting gulf in the opinion polls.

The rebate of up to $800 for secondary students and $400 for primary school children, including those in their preschool year, would be available to all parents regardless of their income.

Worth $6.3 billion over four years and starting in January, it would cover costs including uniforms, camps and excursions, tuition fees, laptops, textbooks, stationery, extra-curricular music and sports activities.

More than 2.1 million families would be able to claim, for more than 3.6 million children.

The scheme is a contrast to Labor's more modest $2.3 billion rebate plan, which covers laptop computers, other IT equipment and textbooks, but not private school fees.

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The education rebate was the biggest spending item in a Coalition package also offering tax breaks, worth about $1.6 billion over four years, to encourage saving for first homes, $652 million for enhanced child care and $158 million to support carers.

In a speech to a packed audience of Liberal supporters in Brisbane lasting just over 42 minutes, Mr Howard's pledges amounted to spending at a rate of $3.7 million a second.

The big-spending launch — bringing total Coalition promises to more than $60 billion — came despite the latest warning from the Reserve Bank that excessive spending in the economy is fuelling inflation and increasing the risk of further interest rate rises.

Delivering what will be — win or lose — his last campaign launch speech, Mr Howard made a personal pitch on "why I want to be prime minister of this country again", listing reasons including building an even stronger Australia and pursuing full employment.

He warned against the "huge risk" of wall-to-wall Labor governments in Canberra and the states, and said Australia's prosperity would be "seriously compromised" if the economy was badly managed.

Condemning Labor as "hollow", he described Mr Rudd as "a man whose core beliefs are obscure and unknown to the Australian public and perhaps to … himself".

Mr Rudd hit back, saying Mr Howard was increasingly stuck in the past, and that his campaign launch had failed to lay out a positive plan for Australia.

Mr Howard also came under fire from others for his latest pledges, with claims that both the housing plan and the education rebates involved excessive handouts to the wealthy.

But independent school groups backed the education rebate plan, and Labor stopped short of criticising its coverage of private school fees.

Like the education rebates, the Government's first-home savings scheme had a strong element of "me-tooism" as Mr Howard tries to counter Labor in areas it has claimed as its own.

Starting in the 2008-09 financial year, it would allow contributions up to $1000 a year to the home-saver accounts to be tax deductible. Contribution limits would be indexed annually, and all interest and earnings would be tax free.

A home savings account for children would be available for people under 18 to which parents, grandparents and the account holder could contribute up to a combined total of $1000 a year. Contributions would be tax deductible and the savings could be used to buy a first home once the account holder turned 18.

Adults between 18 and 39 would be able to set up tax-free home savings accounts, to which up to $10,000 annually could be contributed. Account holders would be able to claim a tax deduction of up to $1000 for their contributions. Among other measures to address the housing affordability crisis, the Government would remove capital gains tax for people who share equity in a family member's first home.

Mr Howard also announced measures to relieve the supply problems of housing affordability, including expediting the disposal of 961 hectares of Commonwealth land in NSW, Victoria, Queensland, South Australia and the ACT.

The Government would give $500 million over three years to help fund community infrastructure — including community halls, libraries and sporting grounds — for new housing developments and urban consolidation.

Countering Labor's initiatives on child care, Mr Howard said a re-elected Coalition government would cut the amount that parents have to pay upfront each week by 30 per cent. It would pay the child care tax rebate directly to child care services so they could pass it onto parents at once. This would help about 500,000 families from April.

The Government would also provide capital funding of up to $1 million to local governments to build or extend up to 35 child care centres in parts of Australia where places are short.

The Government says its commitment to pay the rebate up-front will save $23.25 a week for a family on $35,000 with one child in full time care. Families on $60,000 would save $37.40 a week.

Mr Rudd, during a visit to Townsville, blasted the speech as lacking a positive plan for the country, and intensified his attack over the proposed leadership transition from Mr Howard to Peter Costello, saying voters could not trust the Prime Minister to deliver on his promises because he will not serve a full term.

He said the key elements of the Liberal campaign launch failed to adequately address major policy challenges, and declared Labor had a better plan for working families.